I bet you can anticipate our answers: it depends.
You really need to discuss the particulars over with a lawyer in more detail. I favor LLCs, which will also allow for the foreign, non-resident ownership. Based on your facts, I would assume that an S-Corp will be unavailable to you, so double taxation may present an issue with the C-Corp, but it does greatly depend. In many cases, the C-corp will be much more practicable.
The US Dept of Commerce also requires a compliance survey to be submitted anytime foreign ownership of a US entity is 10% or greater (see BE-605: http://www.bea.gov/surveys/pdf/be605iweb.pdf).
I will link you to some general helpful info below and Most of us here, including myself, offer a free phone consult.
The law firm of Natoli-Lapin, LLC (Home of Lantern Legal Services) offers our flat-rate legal services in the areas of business law and intellectual property to entrepreneurs, small-to-medium size businesses, independent inventors and artists across the nation and abroad. 866-871-8655 Support@LanternLegal.com DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.
This question may seem simple but it is much too complex to answer here in a few sentences. My high suggestion is to consult with very experienced legal counsel before you make any moves.
Every case is different. As such, the answer cannot be considered legal advice nor can it constitute an attorney-client relationship.
I know you would like a simple answer, but there really isn't any. If the foreign owner is getting the equity interest through a Corporation, then you may need to set up a Corporation in the US for the foreign owner's tax purposes. Normally, I would recommend a LLC, but that would mean your foreign partner would need to get it. TI and and also file a nonresident return on the US income. You really need to talk to a good tax and business lawyer to structure this business properly. Do not try to do this yourself!
I hope this helps!
If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.
Oh if it were so easy.....appreciate you trying to cut to the chase but not doable. Even in a domestic setting it requires substantial info and in an international setting you can multiply the issues by a factor of 10.
My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.
We regularly advise budding multinationals on these issues. Your answer depends on many factors, including:
- Where from abroad will you operate?
- What kind of revenue and expenses to you expect?
- Where are your customer bases?
- How do you intend to use profits?
- What are the tax rates in the various countries you are looking at?
- Where would you like to engage in agreements?
- How many employees will you have?
- Where are your physical operations?
- What is your exit strategy?
- How are you investing in operations?
These questions will guide initial consultations.
Portage Bay Law PLLC is an international law firm that give companies doing global business the knowledge and confidence they need to comply in any country. Our answers on this site do not constitute legal advice, nor do they establish an attorney-client relationship. The only thing that can do that is a signed Engagement Letter and Fee Agreement, which you can get by contacting us through www.portagebaylaw.com.